As volatility in Korea's stock market widened, the Financial Supervisory Service held an emergency meeting with market experts to review major risk factors. The FSS said increased margin trading and concentration in certain stocks could amplify market volatility and decided to strengthen its continuous monitoring system.
On the 17th, the Financial Supervisory Service held an "emergency meeting with market experts on widening volatility in the capital market" at its Yeouido headquarters in Seoul to review the recent rise in volatility in Korea's capital market and examine major risk factors.
Experts said that concentrated investments in specific stocks and a single-stock leveraged ETF listed on the 27th of last month, combined with retail investors' speculative trading tendencies, are expanding market volatility. They assessed that, in this environment, the rapid increase in margin loan balances could heighten the risk of forced selling by retail investors.
Regarding the recent outflow of foreign funds, opinions were raised that it could affect exchange-rate volatility, requiring continued monitoring. However, there was consensus that, because the moves largely reflect profit-taking after a short-term surge, caution is needed against interpreting them as a full-fledged capital flight from Korea's capital market.
Hwang Sun-o, deputy governor for capital markets and accounting at the Financial Supervisory Service, said, "In response to the recent increase in market volatility, we will further strengthen our continuous monitoring system for domestic and external risk factors," and urged, "Investors should avoid excessive reliance on high-risk products or taking on reckless leveraged positions, and practice long-term, diversified investing within a tolerable range based on confidence in the fundamentals of the domestic economy."